EnergyAustralia has become the latest big energy retailer to sign a power purchase agreement for a large solar farm, committing to a 13-year off take agreement for the 142MW Ross River solar farm in Queensland, in what is the largest deal of its type to date in Australia.
The agreement is the second announced in recent months by EnergyAustralia as part of its program to buy around 500MW of power from new wind and solar projects to help meet its share of the renewable energy target.
Last December, it signed a PPA for the output of the 48.5 MW solar farm at Manildra in regional New South Wales until 2030.
While most utilities have been busy meeting their RET requirement, others have chosen an alternative route. ERM, a supplier of electricity to many big business customers, has chosen to pay more than $120 million in “penalty payments” rather than committing to new renewable energy projects.
EnergyAustralia, meanwhile, says it will buy 80 per cent of the electricity generated by the $225 million Ross River Solar Farm, which is located near Townsville, and is one of Australia’s largest solar projects in development. The solar farm is to be built by Palisade Investment Partners and solar farm developer ESCO Pacific.
“Providing reliable, affordable and cleaner supplies of energy has never been more important than it is today,” EnergyAustralia managing director Catherine Tanna said in a statement.
“As an owner of coal-fired power stations EnergyAustralia has a responsibility to provide leadership on the best, most cost-effective means of reducing emissions and addressing climate change.” (EnergyAustralia owns the Yallourn brown coal generator in Victoria and the Mount Piper power coal power plant in NSW).
“For us, that means broadening Australia’s energy mix by finding and supporting quality renewable projects, like the Ross River Solar Farm, on behalf of our customers.”
Tanna said new projects like the Ross River Solar Farm would come to underpin energy supply in Australia as coal-fired power plants were retired.
The Ross River project is located on a disused mango plantation and was selected because of the high solar irradiance in the region, and its average 320 days of sunshine annually. Construction is expected to start in the first quarter of 2017 and will take about 12 months.
ESCO has previously announced plans for 1GW of solar farms in Australia, including four projects in Queensland. Within the next two months it expects to have more than 650MW in consented projects.
ESCO Pacific’s managing director Steve Rademaker said solar was coming down in cost and was becoming competitive with wind energy. He would not disclose the cost of the PPA, or the costs of the solar plant.
But he did agree that the cost was well below $100/MWh. “Everyone in the market knows that. The question is where does it end up,” he told RenewEconomy.
Palisade is likely to invest in other ESCO projects and is being backed by the Clean Energy Finance Corporation, which has committed $75 million to the Palisade Renewable Energy Fund, and will invest $20 million in the Ross River project, its first direct equity investment in a solar farm.
The CEFC says the investment is the first in a series of large-scale solar investments the CEFC will make in Queensland this year as the organisation works with developers on speeding up the delivery of clean energy opportunities.
“The Ross River investment is also the first time the CEFC has taken an equity stake in a solar farm, sending an important signal to institutional investors about the commercial potential of greenfield clean energy developments,” it said in a statement.
Palisade CEO Roger Lloyd said the company had “spent considerable time identifying a pipeline of high quality renewables projects to augment our existing wind assets and deliver robust cash flows for our investors.”